Company that sued school districts over taxes wants another break

Some question corporate saving when burden is put on schools

Valero's application for a $1.6 million tax break was blessed by Council last month under Gov. Rick Perry's Texas Enterprise Zone program.

Valero's application for a $1.6 million tax break was blessed by...

Valero Energy Corp., which has generated ample controversy in recent years for seeking tax breaks and suing local governments to drop its tax bill, has applied for another public subsidy to expand its Houston refinery.

If approved, Valero would receive a $1.6 million tax break over five years for investing $800 million in new refining equipment and creating 12 new jobs at its refinery in the Eastside neighborhood of Manchester, while retaining 320 existing jobs.

Tom "Smitty" Smith of Public Citizen Texas said the idea that Valero would need further tax breaks when activists are holding bake sales to support schools affected by the company's efforts to lower its tax bills is "silly."

"The argument that we need to continue to give tax breaks to a major corporation that already has this kind of investment is just foolish," Smith said. "What are they going to do? Pick up their refinery and move it someplace else after investing all these billions of dollars? It is nothing more than another round of corporate welfare."

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The Houston City Council blessed the company's application for a tax break under Gov. Rick Perry's Texas Enterprise Zone program last month, unanimously and without discussion.

That action troubles Pat Gonzales, a former Manchester resident now living in Pasadena who was among those protesting in 2011 when Valero sought state tax breaks for some of its refining equipment.

"I don't feel they should have any tax break unless they can prove to the community they've cleaned up their act, and they haven't," Gonzales said, adding she left Manchester because pollution was making her ill. "They're still polluting the air. They shouldn't give them tax breaks just for creating jobs: 'Here's a pat on back just for being here.' That's crazy."

Arturo Blanco, who leads Houston's pollution control team, said Manchester residents express frustration about air pollution from Valero and other nearby facilities, but often do not aid officials by reporting suspected incidents of pollution. When city monitors have done random spot checks, Blanco said, instruments have not registered pollution levels that would cause concern.

Application protested

In 2007, Valero claimed expensive equipment at its six Texas refineries - in Houston, Texas City, Port Arthur, Corpus Christi and Moore County - qualified for tax breaks under state rules aimed at encouraging cleaner air. The controversial application, which was protested by numerous residents, including Gonzales, was rejected by the Texas Commission on Environmental Quality in 2011 because the firm could not show the equipment's environmental benefit.

The request would have netted the company $130 million a year in tax savings, at the expense of local school districts, cities and counties.

More recently, Valero repeatedly has sued local governments seeking to cut its tax bill under a clause in a 1997 tax law intended to help homeowners avoid unfair valuations, forcing cities, counties, schools and community colleges to repay tens of millions of dollars.

The clause lets taxpayers have a district court reduce their properties' value to the median value of similar properties rather than using the fair market value, but county appraisers across Texas say dissimilar properties often are used.

Last year, school officials in Port Arthur said they were struggling to pay $3 million annually toward a debt created when Valero won a tax suit there; Texas City schools faced the same tax clawback, and Valero had more pending lawsuits in both districts.

At the time, Valero spokesman Bill Day said, "we did what any taxpaying citizen would have done."

Enterprise zone

Andy Icken, Houston's chief development officer, used the same reasoning to explain the city's support for the current tax break application. Icken also said Valero officials convinced him the investment would occur in Louisiana without the state tax break.

The city does not determine the rules of the enterprise zone program, Icken added, it simply participates in a program set up by the state.

Asked whether recent tax controversies were a concern for the governor's office, Perry spokeswoman Lucy Nashed said, "We review all projects based on the criteria outlined in statute."

City Councilman Robert Gallegos, who represents the area around the refinery, noted the tax break will come from the state, not city coffers.

"It's something that benefits the district in regards to offering a way for a company to do some expansion and also to increase employment, so, hopefully, it will be individuals that live in the district," Gallegos said. "Valero, basically, has been a good partner in regards to the community. Having been a community leader for 30 some-odd years, that's what I want to do is partner with companies, corporations that are providing employment, but at the same time they have to give back to the community."

Valero spokesman Bill Day said the new refining unit would process 90,000 barrels per day. Asked whether the project, which is expected to be completed in 2016, would proceed without a tax break, he said, "It still has layers of decisions to be done."

Enterprise zone rules require that qualifying projects give a quarter of the new jobs - three, in this case - to residents of one of the state's enterprise zones or to residents of the zone itself who meet criteria such as having been unemployed for at least three months or receiving public assistance.

12 new jobs

Gonzales, however, questioned whether the expansion and the 12 new operator jobs proposed in Valero's application would benefit locals. City documents show the new jobs would carry average annual salaries between $44,400 and $171,500. For those living in impoverished neighborhoods such as Manchester, Gonzales said, those posts likely will not be attainable.

"I'm not sure where you're getting that the jobs would likely not be filled by locals," Nashed said. "Enterprise zone projects are nominated by local officials, and are meant to allow communities to partner with the state of Texas to promote job creation and retention and significant private capital investment that will assist economically distressed areas of the state."

Nashed said the governor's office is reviewing the application and will rule on it by September. The city can nominate up to nine projects every two years for the enterprise zone program. To date, Icken said, each nominee has been approved.